Markets are an efficient way of allocating society’s resources. However, the magic of markets work under some ideal conditions. One important conditions is that of complete information. If market participants have asymmetric information markets fail to perform efficiently. This is precisely the problem with higher education in Pakistan.An economist is someone who design markets to solve society’s problem of allocating scarce resources. This may sound old to many ears but, trust me, the element of design is new. This is what Esther Duflo, one of the most promising economist of our time, has (re)emphasized recently. Let us have a look at the market of higher education in Pakistan. What are the major problems? What are the causes behind these problems and how to fix them?As Milton Friedman once said, in economics you can reduce all problems to demand and supply. First there was the big bang reforms of early 2000s that created, overnight, a huge gap in demand and supply of university faculty. On supply side, there were funds but no human resources. On the demand side there were students but no teachers. In the jargon of experiment design, an experiment was started but subjects were not there!Markets responded to this gap between demand and supply. Short term solutions included multiple engagements of existing human resources. However, there were huge funds for universities to offer professional degrees, and to expand the scope of their faculties. Incentives were there. Unemployment was there. And most dangerous of all aspects, information was incomplete. In a word, the recipe for market failure was complete! No mechanism was there to judge the capacity or quality of existing institutions to wrestle with market forces unleashed by sudden awakening of public authorities. The prevailing wisdom was that, the homing pigeons (HEC funded foreign PhD scholars) will fill out the gap over time.Strange are the ways of markets. Especially when the forces are manipulated to transform scarcity value of resources, markets don’t direct resources by invisible hand but respond by invisible fists and kicks. The existing opportunities cannot remain unexploited. The clever arrangements were discovered. Mafias propped up. The university management was happy as long as they could secure the public funds. Again, there was no information about quality. Sadly too, nobody could foresee the rift that was going to appear between local and foreign degree holders!There is no assessment that what percentage of HEC homing pigeons actually landed and stayed here. But the current situation at universities is troubling, to say the least. The basic problem still is that of demand and supply trying to match each other under asymmetric information. But now the supply side has managed to come up significantly. For many this higher supply is at the cost of quality. Those who are on the demand side __ students, parents, and industry participants __ are suffering from incomplete information. Nobody knows about the problem solving ability of those sitting in the ivory towers of our universities. (One can shed tears on the quality of research and the application of knowledge in solving practical problems that we are facing). Given the few options available to them, students are not in a position to care who is going to teach them, what courses, and what the teaching track record of their teacher is. Their interest is to save time (allegedly at the cost of money) and get degree. Most worrisome is the no voice strategy adopted by parents, whose hard earned resources are wasted on such degree programs.If the current situation on the demand side is troubling, it is horrible on the supply side. Universities need to increase their research output to climb up the list of HEC university ranking. This explains the universities preference for MPhil and PhD programs: they help increase research output which in turn help the institute get good HEC rating, something that can be drummed to attract students. Again, the problem is that of asymmetric information: quality is unknown, gaming and numbering is there.Second comes the problem of effort. If the minimum effort required in attaining MPhil or PhD degrees is high then probably it deters some participants on the demand side. But that hurdle has reduced. There are various factors behind it. There are groups operating at university levels controlling supply side (one of my colleague labelled such groups mafias). A group membership will help you get PhD in 4 to 6 years, a job in the same or some other linked department. Your life will be easier and happier.Third comes the quality aspect. When you are part of mafia system then they will also save you from various regulatory issues related to quality. You can publish in mafia controlled journals and your prospects of getting promoted (on the basis of publications, thesis supervision, and papers read in conferences) will be very high.One can ask: why mafia should let anyone come and join them? No mafias don’t let anyone come and join them. There are two types of recruitments. One is reference based. If you know some mafia member he or she will help things out for you. Another way is to prove your loyalty. This is done by wasting years in serving (mostly non-professionally) the big wigs in the mafia. Once you prove your loyalty and durability, you will be admitted.The mafia operate as a team. There are perks and privileges associated with mafia membership. You can be invited as an external members in MPhil theses. It permits you a sufficient easy money in one or two days. Similarly, you can dodge the rules of your institute and serve some other university in some capacity (not only as a visiting faculty which is somewhat riskier).The mafias in different universities serve each other’s interest. So that they can easily achieve targets or standards set by their employer or the regulator.This is the state of higher education in Pakistan. It is a challenge to redesign the market for higher education in a way that insulates the quality from the prevailing malaise. We shall take up that challenge in the next posts.

You may have heard someone in your family or neighbors being awarded a laptop from provincial or federal government. All four provincial governments are spending a part of their educational budgets on distributing laptops among higher education student. Unsurprisingly in Pakistan, the propaganda and enthusiasm behind such programs is more impressive than the required scientific reasoning. The Punjab Chief Minister, generally considered as the pioneer of this scheme, has distributed 120,000 laptops in 2016-17. In the new fiscal year, the Punjab government has allocated Rs. 20 billion (or 6 percent of its education budget) on laptops. Is it worth the taxpayer’s money?Technology has helped improved learning outcomes. However, when it comes to laptops, there is no favorable evidence that these (or other internet based devises like tablets and smartphones) increase student’s productivity (http://www.iadb.org/en/research-and-data/publication-details,3169.html?pub_id=IDB-WP-304). There is evidence that using laptops, tablets, and smartphones significantly reduce student’s performance. Again, there is evidence that desk top computers increase students’ performance. These findings can be interpreted in many ways. Seen in terms of equality of opportunity, one can argue that computer labs in colleges and universities have greater utility and should be given greater attention than laptops in the hands of few bright kids. This is easy to see. One way to make computers a more effective tool of learning is by institutionalizing the use of this technology through computer labs. Without first creating demand from teacher’s side, simply supplying laptops to students may reduce this technology to a toy rather than an instrument of learning. Conspicuously enough, the main player in the learning process, the teacher, is missing from this (so called) technology drive towards smart education. Making bright kids more productive while ignoring bright teachers is like creating asymmetry in the learning process. Unfortunately, this asymmetry here is working against teachers. But if laptops have such a dubious efficacy as an educational tool, then why governments in other developing countries are distributing laptops to their students? Let’s try to explore the answer. The laptop schemes have greater propaganda value. It can be seen through official statistics. It is a routine that governments’ statistics are too large: followed by a chain of zeros. To make sense of them, we need to put them in context: how much of what? Let us apply this to our celebrated laptop scheme. In 2013-14, the provincial government distributed 100,000 laptops. Whether this number is large or small requires putting it in terms of total number of students in high schools, colleges, and universities in Punjab. As these are the students supposed to be the major beneficiaries of this scheme. Even if we ignore college students and count only the graduate and post graduate students enrolled in all colleges and universities in Punjab and divide the 100,000 laptops by this number we get 0.17 or 17 percent. In other words, less than 1 out of every 5 degree students were benefiting from this scheme in 2013-14. Then, the scheme was hailed as a great success, or so we were told. In 2016-17, with more students added in the degree pool over this 4 year period, the provincial government has planned to distribute more laptops i.e. 120,000. But this was not a net increase as the ratio of laptops and students comes out the same i.e. less than 1 out of every 5 degree students in Punjab. There is no change. But propaganda is on the rise. More worrisome than the constancy of laptop-student ratio is the fact that education expenditures in Punjab are decreasing since 2013. In 2013-14 education and education services was given 26 percent of Punjab’s annual budget and it reduces to a little over 18 percent in 2016. But student population has increased over the years. Thus, the budget of Rs. 313 billion (or 313 followed by 9 zeros), as announced in 2016-17, sounds large. But if consider in terms of total young people (i.e people aged between 15 to 24 years or college plus university student population) it looks unimpressive. Thus, assuming that the proportion of 15-24 years age group remains unchanged in our population since the 1998 census, this age group now has 33,459,030 people in 2015. In more formal language, there were 33.5 million individual aging between 15 to 24 years in Punjab in 2015. And the budget allocated for education is 313 billion or Rs. 9.35 per person of 15-24 years of age. This is the amount that our provincial government has planned to spend in year 2016-17 on all the education services in Punjab (not only on students). In the current budget the education expenditures further reduced to 17.5 percent of total expenditures which is less than the previous year’s outlay. In per student terms they are definitely lower given the 2 percent annual growth rate of student population. If I add school going children in this calculation then the per student education spending of Punjab government will disappear entirely. Moral of the story: Propaganda rather than education is the real priority of our policymakers. To conclude, if government is really serious about improving students’ lot it may spend more on strengthening and building the culture of computer labs in our institutes primarily through teacher’s training, rather than distributing handful of devices to handful of students. The recipe is to spend on institutions rather than on devices. The former are enduring and public, the latter short lived and personal.

This piece targets a typical university student. One who is desiring highest grade putting in least effort. Dear Student, your approach is wrong for several reasons. Yearning for grades without raising the stock of your knowledge is not only bad ethics but bad economics. In one word, it is irrational: you get what you deserve not what you desire. And what you deserve is determined by the amount of effort you put in.Why shy from putting in effort? I agree with you, nobody likes to put in effort. But no pain no gains, always remains the same. This sounds irrefutable. But this is not my argument. My argument is different.There is a principle in nature. You have to sow before you reap. It means that your future rewards depends on your effort in the present. This is not difficult to observe. As time changes, a popular entertainer, who was once the heart throb of his generation, finds himself living an obscure life. If he is getting any return in these stagnant times, it is the outcome of his efforts he puts in when the time was on his side. Even a grasshopper understands this logic: Work hard in the summers, and sit back and eat in the winter. Because in winter it cannot work. So summer requires double the effort.Same is the case with human life. Best efforts are need to be put in when one is in her prime years. The rewards of these efforts one puts in her spring days will be reaped in one’s winter years. Why? Affordability is the plain logic behind it. Putting it simply, effort is more affordable in one’s youthful years. Am I start sounding like an economist? I don’t mind it if your answer is yes. If little economic reasoning can make us smart then what’s bad in it.Coming back to our logic. The greatest constraint a student is facing is that of time. You have to get knowledge and skills ____ all the technical stuff ____ that is needed for a good graduate in a job market. Never forget that you are competing in a global job market populated with Koreans, Chinese, Indians and other developing country graduates. Once you are out in practical life, become a cog in the large machine of daily routine, you don’t find any time to add value to your credentials. Once the shot is fired, the race starts, you cannot halt to tie up your shoe lace. Much more importantly, if you compare the price of effort with the price of leisure, you find the former much less expensive. Why? It is easier for you, in your youthful years, to put in the hard effort and acquire knowledge. The university time is unique. You don’t have any obligations, family responsibilities, neither any other constraints. With exuberant health, strong senses, and a quick and responsive mind, you are well equipped with an enormous arsenal. Only thing you need is the will to utilize it. Generate this will, and gets what you want.As you advance in life, the Mother Nature will increase the price of the effort for you. The arsenal that was given to you gets rusted and deteriorated. Your purse will be filled with the same currency of 24 hours each day of your life but you find the effort increasingly unaffordable. The same effort level which was cheap in youth becomes exorbitantly expensive in the middle years of life.The leisure that you are enjoying now is at the expense of your best potential effort. This is an irrational exchange. Those unscrupulous, who prefer leisure now, with the hope that they come back to studies later on will find themselves on a loser’s side not before many years. Your budget line will change and with it change the relative affordability of effort and leisure. With age comes problems: weak senses, health issues, greater involvement in worldly affairs, family issues, and above all, the sense of getting behind one’s age fellows. The last factor in particular has a disturbing psychological impact.The conclusion: exerting best effort is the best logical strategy for a student who wants to get real knowledge and worthwhile job market skills. A delayed effort, or postponing effort to some future time is an irrational and destructive choice. So stop reading this and start studying.

Markets are makers and breakers of value. This is so because a market is a mechanism for preference aggregation. To put life into it, preferences here are preferences of people, like you and me. When people prefers a good or a service it acquires a higher market value and vice versa.But markets are not the only mechanism for preference aggregation. There are other procedures e.g. democracy is a mechanism through which a society chooses its political decision makers. Unlike markets, democracy works on one person one vote principle. Thus, if you prefer a movie you can watch it ten times over to show the value you put on it. But you cannot cast your vote more than once no matter what the strength of your preference is for a candidate or a party.Derailing a mechanism or deviating from it in some way proves disastrous. This is true for both the mechanisms of preference aggregation: democracy and markets. Thus, as history bears evidence, all the attempts to restrict the functioning of the markets or to ignore the social preferences markets communicate resulted in poor and inefficient outcomes. Similarly, attempts to usurp people’s political rights create disharmony and conflict.Recently, in the wake of political tensions between India and Pakistan, many people from both sides, asking to boycott each other’s entertainment industries. What it means is that no Pakistani dramas for Indians, no Indian movies and shows for Pakistanis and a ban on artists to work on other side of the border. This is not only poor politics but also bad economics.Take for instance Fawad Khan, a Pakistani actor who is enjoying great fan following in India too. Being an artist, Fawad Khan is not working for Pakistani government neither for Indian government. Millions of Indians preferred him. They show their preferences for his acting skills by demanding his dramas and movies from the entertainment market (here means local cable operators and cinemas). So it is the (expressed) preferences of the people that makes the celebrity Fawad Khan and not the nationality or color or ethnic makeup of the artist.Now if the very people who like the artist, suddenly develops a dislike for his acting talent, stop casting money votes for the segments Fawad Khan is featuring in, the market value of Fawad Khan would evaporate. Thus, market comes in again: if people can make Fawad Khan, they can break him too. No one else should take this responsibility. The only thing requires is the existence of impersonal markets that can effectively aggregate people’s preferences.Adopting an exclusivist views like imposing a ban on artists and programs is like derailing the impersonal market mechanism for preference aggregation. This not only disrespect the people right to choose what they prefer but also disrespect the art. Unfortunately, many actors endorse exclusivist views on both sides of the borders. One should ask these actors that who has given them the charge to certify someone’s eligibility for entertainment. Who can give them this charge when the best mechanism for this is already here in the form of markets? Art acknowledges no borders. In our times, art is a global good. Let the markets aggregate the preferences of the people, let them decide who should have the higher entertainment value and for how long.

It is generally said that with knowledge comes responsibilities. An unrequited implication of this is that lack of responsible behavior means lack of knowledge. Whether this is true or not, we cannot try ignorance even if it is a blessing.Knowledge about how we are doing relative to our peers is essential to realize the true sense of independence. After all our nation has spent record Rs. 50 billion on Independence Day celebrations. It is a great sum and there should be some good reason for being so happy. Perhaps we are doing better relative to our peers thus having this exuberance. A number of countries won independence more or less at the same time i.e. late 1940s and can be look up to for comparison.But how to compare countries with all their diverse cultural and institutional environment? This question is important but one can follow accepted rules of comparison. For instance, the income per capita when measured in standard international dollars (technical name is Purchasing Power Parity dollars or PPP dollars) gives the purchasing power that an average citizen enjoys over a representative basket of goods and services.Thanks to the efforts by economists like (late) Angus Maddison historical estimates of major socio-economic indicators are available since the beginning of the modern era (i.e. year 1 to the present time). These estimates covers large number of countries from all the regions. (Details of data sources used in this essay are given at the end).In this analysis, we are focusing on a time period from 1950 to 2012. Thus, in 2012 the annual income of an average Pakistani is 2741 in PPP dollars. This is roughly double the income of what an average Pakistani has had in 1980. It means that our per capita income has doubled over 32 years. By simple rule of thumb, if a given sum grows at the rate of 1 percent, it doubles in 72 years, and at the rate of 2 percent it takes 36 years to double. Thus, a doubling in 32 years means that income of an average Pakistani grew at little more than 2 percent per year. This is fast considering Pakistan’s own past performance over 40 years from 1950 to 1990. Over this four decades stretch an average Pakistani experienced an increase in her annual income from 1006 in PPP dollars to 1904, or less than double.Now consider South Korea who gained independence in 1948. Like Pakistan, South Korea had suffered significantly due to its military conflict with neighboring North Korea. In 1950 an average Korean and an average Pakistani were at the same level or at least the difference was small: average Korean’s annual income was 1.2 times higher than her counterpart Pakistani. But in 2012, the situation was fundamentally different. An average Korean was enjoying 11 times higher income than an average Pakistani. In plain terms, for every 100 PPP dollars value that a Pakistani adds to his country’s national income, his Korean counterpart adds 1100 PPP dollars to Korean national income. Moreover, the income level that an average Pakistani is celebrating on his country’s 69th independence, an average Korean has long surpassed in 1970! With this knowledge we can say that on our 69th independence day we are 40 years behind South Korea, a country who is going to celebrate her 69th independence day on 15th August.One can argue that Koreans are exceptional, that they are a small country and thus are easily manageable. Pakistan on the contrary is big and diversified.This may be the case. So let us check China which is big and diversified than no other country. Moreover China also gained independence in 1949 around 2 years after Pakistan. In 1950 an average Pakistani was enjoying 1.5 times higher income than an average Chinese. This sounds comforting. But China not only cover this income gap but in 2012 an average Chinese has an annual income more than 3 times higher than an average Pakistani. An average Chinese surpassed an average Pakistani of 2012 in 1990s, before entering the new millennium. In plain terms, there is a 22 years gap that an average Pakistani need to cover to stand shoulder to shoulder with his Chinese brother.What about our perennial rival India? In 1950 an average Indian was earning 37 PPP dollars less than an average Pakistani. In 2012, the equation is reversed: the average income of an Indian is 1100 PPP dollars higher than an average Pakistani.The comparison is depressing but it is in terms of money and money can’t buy everything. Perhaps, an average Pakistani, despite of having fewer dollars in his hands also have lesser stock of worries, fewer frustrations and greater capabilities. This sounds plausible as Sri Lanka, despite standing low on income rankings, enjoys greater esteem in terms of human development of its people. So it is also possible that a Pakistani has more happiness and longer carefree life than the countries who crossed us in the rat race of money making.Again skimming through the statistics over 1950 to 2012 period of the life expectancy at birth I found that my hypothesis does not stand up to scrutiny. Over the given period, South Korea lead the race again with adding 34 years of life to its average citizen (starting from 48 years of life expectancy). While China and India are having a tie as both added 32 years to its average citizen’s life (starting from 36 and 44 years average life expectancy, respectively). And an average Pakistan has got an addition of 29 years (starting from 38 years of life expectancy).But it is possible that life expectancy was not increased rapidly in Pakistan because of the large size of our population. One can thus expect that with education our people will become more responsible and so reduce their multiplication rate to catch up with our peers. To check whether this is the case I collect historical growth rates of population. To start, Pakistan had a lower annual growth rate of population in 1950 than the three countries in our group. Thus, in the beginning (i.e. in 1950) Korean and Chinese populations were each growing at a 2 percent annual rate while India’s growth rate was 1.7 percent. Pakistan’s population growth was 1.5 percent in 1950. However, the good part of the story ends here. Population growth in Pakistan attained its peak in 1980 at 3.1 percent and slows down to 2.1 percent in 2012. Compare this with Korean peak of 3.4 percent in 1965 and a slow down to 0.6 percent in 2012. Or with China where population growth attained its maximum of 1.8 percent in 1990 before falling down to 0.5 percent in 2012. Even India did better: Indian population achieved highest growth rate of 2.3 percent in 1980 and fall to 1.3 percent growth in 2012. With so high a population growth rate and with lowest share of expenditure on education of 1.6 percent in 2012 compared to 4.1 percent of Korea or 3.1 percent of India, one can expect an enormous burden on our natural resources in coming years and consequent shrinking of the productive base.What can we conclude from the above analysis? It would be wrong to say that Pakistan is lacking in achievements. However, our standing in this world is gauged in relative terms. And it is here that our performance is below average. To cover the lost ground, we need to increase knowledge base of an average Pakistani, expand his thinking horizon, and make him capable to increase his skill set. If an average Pakistani can learn to take selfie and share it using different apps, he can self-teach himself other skills too. Perhaps the later course would be more in line with the Iqbal’s conception of self (ego).

Sources used in this essayData in this essay is taken from Alexander Avakov’s Two Thousand Years of Statistics (2015) and Oxford Univeristy’s project Our World in Data (www.ourworldindata.org).

What determines social disposition of an individual is an alluring issue for social scientists. Particularly so because different types of dispositions have different consequences for the society. There can be pro-social dispositions and there can be actions that create social costs.Norms and laws are two instruments by which a society can affect the behavior of an individual. Norms are endogenous. A community can impose sanctions if an individual deviates from the accepted norms. Laws are exogenous (at least to an individual). Any deviation from the law is liable to be punished by the state. Thus, laws require force to be effective.To a large extent, the effectiveness of both the instruments (mutual enforcement through norms and external enforcement through laws) depends on the confidence that citizens have on the enforcement mechanisms. If majority trusts the system, the social behavior will conform the laws/norms. If majority don’t trust the system the social behavior will be rebellious. So there are two possible equilibria: a good one and a bad one. In my view, societies have to craft their way to good equilibrium.Now consider the Punjab government’s recent ban on the public stunts especially one-wheeling performed by young bike riders on roads. Government’s intentions are good: reduce the negative externalities bikers create and to impose the “merit good” of youth safety. The method is to increase the cost of the act through punishment. But severity of punishments is not a guarantee to mould the deviant behavior as beautifully and poignantly depicted by Charles Dickens in his classic novel Oliver Twist.In economics alternatives to a choice are important. Unless they have an alternative, the bikers will move away from roads surveil strictly to those with weak or no surveillance to indulge in risky sport. This is not unusual. People have the tendency to ignore the merit goods. For instance, most of us don’t wear seat belts although we know that our choice exposes us to a greater risk. Smoking tobacco is another example. The point is clear: Using external enforcement to change individual’s risk preferences may not prove effective in the absence of an alternative. More importantly, in Pakistan there are no facilities for motor sports (neither for bike nor for car sports) so a substitution away from bike stunts to something else is very unlikely. While, due to lack of good public transport and increasing availability of bikes on installments, it is common for college and university students to own motor bikes. Therefore, the number of young bike riders is multiplying and so do the population of risk loving stunt performers. In addition, availability of good roads and less expensive fuel are increasing the affordability of biking. Thus legal restrictions are not going to change the incentive to show one’s fearlessness and skills to others. From economics stand point we need to raise the opportunity cost of one-wheeling. In other words, an alternative is needed to quench the risk appetite of young bike riders. To be effective, the legal restriction requires complete monitoring of all the roads, all of the time, an impossible task. Even an effective monitoring of the roads in one city entails significant costs. And given scarce resources available to a developing country, monitoring of large number of larger roads means lesser monitoring of smaller roads. The neglect of the later may encourage street crimes. What economics suggest in this regards is simple. Allocate a sporting space for bike riders where they can perform their stunts by paying an entry fee. The sporting space should be equipped with necessary safety measures. To remind, bikers who compete in Superbike World Championship and Grandprix bike races wear suits that reduce the risk of fatal injuries to a minimum. So the stunt arena that government builds for bikers should have the following (non-exhaustable list of) rules:

A biker should be more than 18 years of age and have a valid motor cycle license;

he/she should have the prescribed bikers suit that contains all the safety precautions;

the bike should have necessary protections;

the biker should not be under the influence of any drug.

In addition, and to raise the opportunity cost of performing stunts on public roads, following measures can also be used: those who use the stunt arena required a prior registration so that traffic authorities can have their complete record. If anyone caught doing stunt on road such a rider should face a ban on entering the sporting space. Similarly if someone who used the space and is caught doing stunts on road, have its driving license cancelled and have to be barred from using arena in future. These measures will raise the opportunity cost of performing stunts on public roads.In my view, this arrangement will prove to be a win-win solution both for the government and for the riders. It permits bikers to quench their thirst for road rage in a way that is far safer than the previous method. Moreover, by permitting our youth a bike stunt facility we also allow them to professionalize their talent rather than curbing it. It is possible that such a facility attracts audience and participants from around the world.There are a number of risky sports in the world. However, the countries around the world have accepted the challenge to make them safer through regulations and legalizing them under prescribed conditions. In this way the authorities are permitting a vent to the energies of their adventurous youth and also having economic gains from the arrangements. We can do the same, with little innovative thinking.

​Modern communication technologies have far reaching implications for our business world. Individuals are much more connected then they were in any other time in human history. More than any other business, the communication, in its modern form, has connected students. It implies its strong ramifications for educational institutions. To my personal chagrin, there is no serious attempt to understand this “logic of connected action” in the market for higher education. Some observations are as follows.Not long ago, universities used to be shrouded in opacity, only known to the world through their dense prospectus. Things are getting more and more visible now. Besides academic programs and staff, almost every activity taking place in a university is known to all, especially to students irrespective of whether they are participating in it. Any attempts by university management to keep things undisclosed are destined to fail, thanks to social media.But how is it affecting university business? To see this, consider a student’s decision problem when deciding about her university. Obviously students form the demand side of the market for education. We spend money daily. But it is clear that even the basic spending decisions are not independent. If you want to purchase shoes, you ask your friends about which brand is “cool”. In other words, in our choices we seek to be closer to the average opinion of those around us. Similar is the case if you want to purchase a mobile. Therefore, no university should assume that a student decide about her future alma mater without consulting other students. Neither can it be assumed that their parents’ decisions are heuristic. They too get influenced by the overall reputation of a university as gathered from friends and relatives. Our newer generations, and increasingly the older generations, communicate more through online social media rather than conversing face to face. There are online networks, groups, circles, and hangout. Even if the discussion is taking place in an environment where friends are present physically they usually post something online to get an opinion from a senior, cousin, or from some wise guy in the circle. All this means greater connectedness of decisions.What if students’ decisions are connected? Is it good or bad for an educational institute? Like other issues in social sciences, this issue too does not have any clear one sided answer. For one thing, decision connectivity increases the possibility of herd behavior. (After all, this is not by chance that with the progress of information technology, there is an increasing occurrence of financial crises). Coming back to herd content in students decisions, this increases the risk for a university. To make this clear lets assume that a university can choose from two types of students: Good type and bad type.Good type students are those with greater ability to do hard analytical work and thus they prefer to be a part of academic environment that allows best exploitation of their abilities. Bad types are those who prefer an environment full of fun and ease. Both types have same information about each other and also about universities they are applying.Suppose that due to some reason___ we will explore such reasons below___ a large majority of good students acquire a bad opinion about a university, rejects a university or rate it below in a list of similar institutes. As the students are interconnected and following herd instinct so what will happen is that all good students reject this university. The rejection of the university by the good type becomes a signal for bad type. With same information available to all, the rejection of a university by the good type makes it a preferred destination for the bad type. By the herd instinct, they all prefer this university.The story does not stop here. This is a stable equilibrium, thanks to modern social networking. Thus year after year the university goes on attracting the bad type students and the institutions and norms are modified to fulfill the students’ expectations about the university.A good university naturally wants a strategy that separates the good students from the bad ones. In technical terms it prefers separating equilibrium. Screening through admission tests and interviews are devices to achieve separating equilibrium. However, these devices are not credible. A university may prefer admits both types of students just to maximize revenue. More importantly, the cost of these university level admission tests for the students is insignificant. Consequently, even a good student may not take them seriously. Finally, these tests are developed by university staff themselves and may be far from being a standard test to gauge students on a comparable scale. Therefore, these devices may prove less than effective in separating two types of students.A better strategy would be to screen students through a standard testing procedure like SAT or GMAT. Only those students will be admitted who score a minimum percentage in such a test. One can object that many brilliant students may face financial constraints to pay for these tests. Secondly, students may think it risky to spend money for these tests and in the end may not get requisite percentage scores. In this way they lose both their time and effort in taking the test. A possible solution for this predicament is an offer by the university to refund the fees of all those students who clear the SAT test and got admission in the university. This will serve two purposes. It gives the credible signal that university is genuinely interested in having good students. Secondly, it gives sufficient incentive for good students to signal their type by putting in the maximum effort. In the 21st century, key to sustainable long term success for any university is having good students. Woe betides any institute who ignore this fact.

Pakistan India cricket matches are famous for their fervor and intensity of competition. From some estimates, the contest is one of the most popular sporting events in the world. As the world T20 2016 is going to see another crucial Pak-India encounter, it is important to see what the strategic options available to both teams are. In other words, can game theory permits insights as to the strategy that any team can adopt to outsmart its rival? This piece is an attempt in this direction.Of course in any game the outcome depends on a combination of skill and luck. To begin our strategic analysis, therefore, we define the skill set as one that contains batting, bowling, and fielding. The forth factor, luck, is of random nature.From the three skills that determine the outcome of the game, who has the advantage in what? Let’s take the batting skills first. This is any body’s judgment. Team India has a clear edge over Pakistan in this department. On the bowling side, the situation is reverse and Pakistan is enjoying slight advantage over India. In fielding, one can assume that the difference is insignificant.What are the strategic options? We can write a simple equation to represent the balance between the teams’ skills (while assuming that both teams have equal luck):(Pak Batting Skill + Batting Luck) < (India Batting Skill + Batting Luck)(Pak Bowling Skill + Bowling Luck) > (India Bowling Skill + Bowling Luck)The recent history of play between the two teams tell us that Pakistan’s batting has a skill deficit when put against Indian batting while Pakistan bowling has a skill surplus compared to Indian bowling. Thus, the winning strategy for Pakistan is to overcome the deficit and to maintain the surplus. However, it is not possible to change the skill surplus/ deficit over night.Consider the batting equation first. Is there a factor that can help Pakistan overcome batting skill deficit? Yes, this is luck. But we assume that luck is a random variable for both the teams. Is there a strategy to turn the random event in Pakistan’s favor? To see this let’s assume that luck follows a normal distribution. In other words, luck follows a bell shaped distribution which means that most likely values are those in the middle of the distribution and unlikely values lie towards the tails of the distribution. To overcome batting deficit, Pakistan needs a “lucky draw” from the luck distribution that is so abnormally positive as to overcome the deficit plus Indian luck (in the above equation). From the graph of the normal distribution, such a draw should come from the right (or positive) tail of the distribution.Is it possible to imagine a strategy that target the right tail of the luck distribution? In the normal distribution, values lying under the tails are less likely compared to values or events that fall in the middle of the distribution. In terms of strategy, it implies that Pakistan needs to play a risky or less probable strategy. But what could that be? A risky strategy for Pakistan’s batting is to open with Shahid Afridi and Ahmad Shahzad. These two batsmen should come with the only objective to post 80 plus runs in the power play. Given their past record, this is entirely possible. In fact, both South Africa and England did the same and ended up with magnificent totals in the end. The risk associated with this strategy is that Afridi, being Pakistan’s captain, may return to pavillion without having a good score. Loosing captain at the initial stage, means pressure for the subsequent batsmen. Thus to account for this possibility the batsman to come, in case Afridi got out before three overs of the game being completed, should be Wahab Riaz. He should be told to go and complete the Afridi’s task. In case, Ahmad Shahzad bowled before Afridi, the batting order should follow its normal sequence. Similarly, if the opening pair breaks after the power play overs then again batting order should follow its normal sequence. This is because in the former case, Afridi will be there to launch an attack. While in the later case, the opening pair had already achieve their objective, namely, to play out the power play and post a healthy total on the score board. The analysis is logical and follows the basic principles of strategic analysis. According to text book analysis of risk, events with lesser probability offer greater return. In other words, the greater the risk associated with Pakistan’s choices, the greater is the possible return and this would create the room for Pakistan to overcome its batting deficit.If Indian team knows that Pakistan is going to follow a risky strategy then how will they respond? The problem with India is that they are generally considered a better side of the two, both because of their strong batting, and their past record against Pakistan in international events. So a risky strategy would not be in their interest. Their best strategy would be to play their normal game, at least in batting. On bowling side, they can play risky to overcome their bowling deficit. For example, they can bring Ashwin to open the Indian bowling attack. In this case, if Indian strategy works, then Pakistan has to play its counter strategy i.e. sending of Wahab or some other hard hitter of the ball up the order. This has two advantages: Pakistan can score quickly while keeping their best batsmen intact for the last part of the play, while India would consume their best bowling option. On the other hand, if Pakistan plays safe, it would turn the game into a routing game with the greater likelihood of it being going in India’s favor.The outcome of this strategic analysis is clear: Pakistan has a chance to win the competition if Pakistan opts for a risky strategy in batting. This chance stems from the fact that greater risk offers greater return. In strategic competition, a disadvantageous player has to play differently from his opponent. Otherwise, the disadvantaged player will never able to cover the lead or deficit. While for the player who is enjoying an advantage, it would be better to do as good as the opponent as long as this maintains his skill surplus.